The agricultural sector will reap benefits from the Central America Free Trade Agreement (CAFTA), according to the American Trucking Assns. (ATA). The bill immediately makes half of current U.S. agricultural exports duty-free, and tariffs on most U.S. farm exports will be phased out within 15 years, according to the Advisory Committee for Trade Policy and Negotiations.
The free-trade agreement also immediately extends the duty-free benefits of exports across 80% of consumer and industrial goods, another 5% within five years, and all such exports within 10 years.
“Right now, Central American goods face almost no tariffs when they enter the United States,” said George W. Bush, upon signing the bill into law Aug. 2. “By contrast, U.S. exports to Central America still face hefty tariffs there. CAFTA will end these unfair tariffs against American products and help ensure that free trade is fair trade.”
ATA said in a news release that CAFTA is expected to create about 25,000 new U.S. jobs in its first year and up to 130,000 in a decade, while boosting U.S. agricultural exports by $1.5 billion annually.
“Where there [is free trade with] growing markets, obviously one of the most significant sectors of the economy will be agriculture, producers of grain and other agricultural commodities,” Fletcher Hall, executive director of the Agricultural and Food Transporters Conference Commercial (AFTC), an affiliate of ATA told Fleet Owner. “Transportation of agricultural commodities will see increased business— particularly near the Southern-East Coast ports. There are tariff reductions that will also help increase traffic.
“As with most emerging markets, there’s going to be some logistical issues that will have to be addressed on how to service those markets,” Fletcher added. “But I don’t see that as a humungous hurdle. We’ve figured out how to handle that, as the agricultural exporters have already established a global trade network.”
“With population and consumption growth for many products stagnant in the United States, access to markets such as those in Central America is critical for the growth and profitability of U.S. agriculture,” said AFTC chairman Greg Owen. “Increased exports will amplify demand and business for commercial transporters of agricultural commodities and food products.”